U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                 FORM 10-QSB


(Mark One)

 X   Quarterly Report Under Section 13 or 15(d) of The Securities Exchange
---  Act of 1934
          For the quarterly period ended        December 30, 2000
                                                -----------------

     Transaction Report Under Section 13 or 15(d) of the Securities
---  Exchange Act
          For the transition period from                to

                     Commission File Number    000-04169
                                               ---------

                                      SYS
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     (Exact Name of Small Business Issuer as Specified in Its Charter)

              California                            95-2467354
     -----------------------------          ------------------------------
    (State or Other Jurisdiction of              (I.R.S. Employer
     Incorporation or Organization)             Identification No.)

          9620 Chesapeake Drive, Suite 201, San Diego, California  92123
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                   (Address of Principal Executive Offices)

                                (858) 715-5500
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               (Issuer's Telephone Number, Including Area Code)


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       (Former Name, Former Address and Former Fiscal Year, if Changed
                              Since Last Report)

     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.
                            Yes   X      No
                                -----       -----

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
3,162,732 shares of common stock, without par value, as of January 31, 2001.
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Transitional Small Business Disclosure Format (check one):

                            Yes          No   X
                                -----       -----

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<PAGE>
<TABLE>
                              TABLE OF CONTENTS

<CAPTION>
                                                                          Page
                                                                         Number
<S>                                                                        <C>
PART I - FINANCIAL INFORMATION

     Item 1.   Financial Statements
               Condensed Balance Sheet (unaudited)
                  December 30, 2000 . . . . . . . . . . . . . . . . . . .    3
               Condensed Statements of Income (unaudited)
                  Three Months and Six Months Ended December 30, 2000
                  and Three Months and Six Months Ended December 25, 1999    4
               Condensed Statements of Cash Flows (unaudited)
                  Six Months Ended December 30, 2000
                  and Six Months Ended December 25, 1999  . . . . . . . .    5
               Notes to Condensed Financial Statements (unaudited)  . . .    6

     Item 2.   Management's Discussion and Analysis of Financial Condition
                 and Results of Operations
               Description of Business  . . . . . . . . . . . . . . . . .    8
               Results of Operations  . . . . . . . . . . . . . . . . . .   10
               Liquidity and Capital Resources  . . . . . . . . . . . . .   11

     Item 2a.  Factors Which May Affect Future Results  . . . . . . . . .   12


PART II - OTHER INFORMATION

     Item 1.   Legal Proceedings  . . . . . . . . . . . . . . . . . . . .   15

     Item 2.   Changes in Securities  . . . . . . . . . . . . . . . . . .   15

     Item 3.   Defaults Upon Senior Securities  . . . . . . . . . . . . .   15

     Item 4.   Submission of Matters to a Vote of Security Holders  . . .   15

     Item 5.   Other Information  . . . . . . . . . . . . . . . . . . . .   15

     Item 6.   Exhibits and Reports on Form 8-K . . . . . . . . . . . . .   16
</TABLE>
                                    -  2 -
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<PAGE>
                                    PART I
                            FINANCIAL INFORMATION

Item 1.   Financial Statements
------------------------------

                                     SYS
<TABLE>
                           CONDENSED BALANCE SHEET

<CAPTION>
                                                                  Dec. 30, 2000
                                                                  -------------
                                                                   (Unaudited)
<S>                                                                <C>
ASSETS
Current assets:
     Cash                                                          $    8,000
     Contract receivables, net                                      2,211,000
     Other receivables                                                 34,000
     Deferred tax assets                                               33,000
     Other current assets                                             101,000
          Total current assets                                      2,387,000
Furniture and equipment, net                                          326,000
Other assets                                                           76,000
                                                                   ----------
                                                                   $2,789,000
                                                                   ==========

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities::
     Note payable to bank under line of credit                     $  676,000
     Accounts payable                                                 116,000
     Accrued payroll and related taxes                                326,000
     Income taxes payable                                              34,000
     Other accrued liabilities                                         13,000
     Current portion of other notes payable                            42,000
     Current portion of capital lease obligations                      13,000
          Total current liabilities                                 1,220,000
Other notes payable, net of current portion                            76,000
Capital lease obligations, net of current portion                      16,000
          Total liabilities                                         1,312,000

Stockholders' equity:
     4% convertible preferred stock, $0.50 par value;
        250,000 shares authorized; 110,000 shares
        issued and outstanding                                         55,000
     9% convertible preference stock, $1.00 par value;
        2,000,000 shares authorized; 69,781 shares
        issued and outstanding                                         70,000
     Common stock, no par value; 12,000,000 shares authorized;
        3,162,732 shares issued and outstanding                       525,000
     Unearned ESOP compensation                                       (60,000)
     Retained earnings                                                887,000
          Total stockholders' equity                                1,477,000
                                                                   ----------
                                                                   $2,789,000
                                                                   ==========
</TABLE>
                                    -  3 -
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<PAGE>
                                     SYS
<TABLE>
             CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
                                 (Unaudited)

<CAPTION>
                                  Three months ended       Six months ended
                                 December    December    December    December
                                    30,         25,         30,         25,
                                   2000        1999        2000        1999
                                ----------  ----------  ----------  ----------
<S>                             <C>         <C>         <C>         <C>
Contract revenues               $2,455,000  $1,725,000  $4,689,000  $3,428,000

Costs and expenses:
Contract costs                   2,013,000   1,428,000   3,885,000   2,843,000
General and administrative         273,000     225,000     522,000     430,000
                                 2,286,000   1,653,000   4,407,000   3,273,000

Income from operations             169,000      72,000     282,000     155,000

Other (income) expenses:
Interest income                     (4,000)     (1,000)     (6,000)     (3,000)
Interest expense                    12,000       1,000      19,000       6,000
                                     8,000           0      13,000       3,000

Income before income taxes         161,000      72,000     269,000     152,000

Provision for income taxes          67,000      24,000     109,000      39,000

Net income                          94,000      48,000     160,000     113,000

Dividends on preferred shares        1,000       1,000       4,000       4,000

Net income applicable to
     common stock                   93,000      47,000     156,000     109,000

Retained earnings at beginning
     of period                     794,000     663,000     731,000     601,000

Retained earnings at end
     of period                  $  887,000  $  710,000  $  887,000  $  710,000

Basic earnings per common share    $  0.03     $  0.01     $  0.05     $  0.03

Diluted earnings per common
     share                         $  0.03     $  0.01     $  0.05     $  0.03
                                ==========  ==========  ==========  ==========
</TABLE>
                                    -  4 -
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<PAGE>
                                     SYS
<TABLE>
                      CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<CAPTION>
                                                          Six months ended
                                                        December     December
                                                           30,          25,
                                                          2000         1999
                                                       ----------   ----------
<S>                                                    <C>          <C>
Operating activities:
   Net income                                          $  160,000   $  113,000
   Adjustments to reconcile net income to net cash
    used in operating activities:
      Depreciation and amortization                        59,000       41,000
      Release of ESOP shares for compensation              25,000            0
      Changes in operating assets and liabilities:
         Contract receivables                            (919,000)     143,000
         Other receivables                                 18,000      (54,000)
         Other current assets                              (1,000)     (24,000)
         Other assets                                     (61,000)     (18,000)
         Accounts payable                                 (35,000)    (298,000)
         Accrued payroll and related taxes                 41,000      (32,000)
         Income taxes payable                             (91,000)    (126,000)
         Other accrued liabilities                         (8,000)     (26,000)
Net cash used in operating activities                    (812,000)    (281,000)

Investing activities-acquisition of furniture and
   equipment                                             (150,000)     (48,000)

Financing activities:
   Net line of credit borrowings                          676,000       26,000
   Payments on other notes payable or capital leases      (13,000)     (28,000)
   Payments of dividends                                   (4,000)      (4,000)

Net cash provided by (used in) financing activities       659,000       (6,000)

Net decrease in cash                                     (303,000)    (335,000)
Cash at beginning of period                               311,000      343,000

Cash at end of period                                  $    8,000   $    8,000
                                                       ==========   ==========

<FN>
Supplemental disclosure of cash flow data:
  Interest paid                                        $   19,000   $    6,000
  Income taxes paid                                    $  200,000   $  178,000
</TABLE>
                                    -  5 -
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<PAGE>
                    NOTES TO CONDENSED FINANCIAL STATEMENTS

(1)  In the opinion of the Registrant, the unaudited financial information in
this report reflects all adjustments, consisting only of normal recurring
accruals, which are considered necessary to a fair presentation of its
financial position as of December 30, 2000 and the results of its operations
and cash flows for the periods shown.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
condensed or omitted pursuant to SEC regulations.  It is suggested that these
financial statements be read in conjunction with the audited financial
statements included in the Registrant's Report on Form 10-KSB for the fiscal
year ended
June 30, 2000.

(2)  Earnings per common share: Effective June 30, 1998, the Company adopted
the provisions of Statement of Financial Accounting Standards No. 128, Earnings
per Share ("SFAS 128"), which replaced the presentation of "primary" and
"fully-diluted" earnings per common share required under previously promulgated
accounting standards with the presentation of "basic" and "diluted" earnings
per common share.

     Basic net earnings per common share are calculated by dividing net income
applicable to common stock by the weighted average number of common shares
outstanding during the period.  The calculation of diluted earnings per common
share is similar to that of basic earnings per common share, except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if all potentially dilutive common shares,
principally those issuable upon the conversion of preferred stock and the
exercise of stock options, were issued during the period and the numerator is
adjusted to eliminate preferred and preference stock dividend requirements.
<TABLE>
     The following table summarizes the calculation of basic and diluted
earnings per common share for each period:
<CAPTION>
                                   Three months ended       Six months ended
                                  December    December    December    December
                                     30,         25,         30,         25,
                                    2000        1999        2000        1999
                                 ----------  ----------  ----------  ----------
<S>                              <C>         <C>         <C>         <C>
Numerators:
   Net income (A)                $   94,000  $   48,000  $  160,000  $  113,000
   Deduct - preferred and
      preference dividend
      requirements                    1,000       1,000       4,000       4,000

   Net income applicable to
      common stock (B)           $   93,000  $   47,000  $  156,000  $  109,000


Denominators:
   Weighted average shares for
      basic net earnings
      per common share (C)        3,162,732   3,236,732   3,162,732   3,236,732
   Add effects of dilutive
      securities from assumed:
      Exercise of stock options       5,144       3,444       6,669       3,444

   Weighted average shares for
      diluted net earnings
      per common share (D)        3,167,876   3,240,176   3,169,401   3,240,176

Basic net earnings
   per common share (B/C)        $    0.03   $    0.01   $    0.05   $    0.03

Diluted net earnings
   per common share (B/D)        $    0.03   $    0.01   $    0.05   $    0.03
                                 ==========  ==========  ==========  ==========
</TABLE>
                                    -  6 -
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<PAGE>

(3)  The results of operations for the quarter ended December 30, 2000, are not
necessarily indicative of the results to be expected for the full year.

(4)  The Company's fiscal year runs from July 1 through June 30.  The Company
uses the 5-4-4 weeks per period method for each quarter; periods one (July) and
twelve (June) may vary slightly in the actual number of days due to the
beginning and end of each fiscal year.


(5)  As previously disclosed, on March 28, 2000, the Company was served notice
that it was named as a defendant in a lawsuit alleging breach of factoring
contracts.  On December 8, 2000, the United States District Court, Central
District of California, dismissed the complaint.  The plaintiffs have appealed
the case.

(6)  The Company maintains an $850,000 revolving credit facility with Scripps
Bank which matures on October 15, 2001.  The loan is collateralized by all of
the Company's assets including contract receivables.  Scripps advances funds
requested by the Company of up to 80% of the Company's billed contract
receivables which are less than 90 days old.  Scripps charges an interest rate
of 1.5% over prime.

(7)  On December 22, 2000, the Company filed a Form 8-K announcing that it had
signed a Letter of Intent to acquire Paragon Systems, Inc.

                                    -  7 -
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<PAGE>

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations
          -----------------------------------------------------------

     The following discussion contains forward-looking statements, which
describe risks and uncertainties involving the Company.  Such forward-looking
statements include, but are not limited to, statements regarding future events
and the Company's plans and expectations.  The Company's actual results may
differ significantly from the results discussed in the forward-looking
statements as a result of certain factors including, but not limited to, those
discussed herein.

Description of Business
-----------------------

     The Company was formed and incorporated in the State of California in 1966
as Systems Associates, Inc.  It became a public corporation in 1968, and
engaged in systems analysis, systems engineering, computer services and
software for Government and industry.  In addition to providing these services,
the Company conducted other business activities in computer network operations
and software applications, water resources development and management, and in
engineering services for sanitary waste development and construction
management, which it subsequently sold (1975) to other companies.  The Company
changed its name to Systems Associates, Inc. of California on December 4, 1979,
and, as of
March 18, 1985, it was changed to SYS.  The Company corporate offices were
moved to San Diego, California in February 19, 1984, from Long Beach,
California.

     The Company currently provides engineering, management and technical
consulting services to various agencies of the United States Government and
private industry as a prime contractor and as a subcontractor.  The specific
services provided are primarily in the fields of:

Systems Engineering                          Management and Analysis Consulting
Naval Architecture and Marine Engineering    Software Development
Program Management                           Information Management Systems
Environmental Engineering                    Logistics Analysis and Engineering
Electronic Record Management                 Cost Analysis and Forecasting
Information Operations                       Theater Assessment Profiling
Effects Based Planning                       Total Ownership Cost

     The Company currently has three principal contracts with the U. S. Navy.
These prime contracts are Underway Replenishment; Management, Planning,
Analytical and Administrative; and Naval Architecture and Marine Engineering.
The Company also has three contracts with the U. S. General Services
Administration (GSA).  These prime contracts are Information Technologies,
Financial Management Services, and Professional Engineering Services.

     The Underway Replenishment (UNREP) Program had its third of three option
years exercised on December 1, 2000.  This program has accounted for about
14% of the Company's revenue so far in fiscal year 2001.  The program provides
for in-service engineering to the U.S. Navy Fleet.  The decline in the number
of active fleet ships and the transfer of dedicated UNREP ships to the Military
Sealift Command has resulted in a stepped up backfit program.  The fleet is
currently upgrading the UNREP systems to Navy Standard on the AOE 3 and 4.
The Company is also providing engineering design support in the development of
the next generation ACDX ship class that is scheduled to begin construction in
late 2001.  Efforts are also expected to begin in this coming year to design
the next generation UNREP Heavy Lift System.  Work is continuing on the
Combatant Vertical Strikedown system for consideration in the construction of
the Navy Surface Combatant DD-21 program.  The Company has supported this navy
program in various roles since 1982.

                                    -  8 -
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<PAGE>

     The Management, Planning, Analytical  and Administrative (MPAA) Program
had its first of four option years exercised on February 1, 2001.  This program
has accounted for about 46% of the Company's revenue so far in fiscal year
2001.  This program supports the U.S. Navy's Port Hueneme Division, Naval
Surface Warfare Center.  The Statement of Work provides a broad and flexible
scope of work which allows a wide range of tasking.  The Company has developed
work competencies in such areas as Management Consulting, Information Services,
Human Resource Services, Combat Systems Engineering and Facilities Engineering.
The MPAA program has received customer recognition for its high standards of
excellence and professionalism.  The government has rated the Company
performance as outstanding for the base year of the contract.

     The Naval Architecture and Marine Engineering (NAME) Program had its
fourth of four option years exercised on November 30, 1999.  This program has
accounted for about 12% of the Company's revenue so far in fiscal year 2001.
This cost plus fixed fee contract was issued by the U.S. Navy's Port Hueneme
Division, Naval Surface Warfare Center (PHD NSWC).  The Company is providing
Logistics Engineering Services to the Naval Facilities Engineering Command in
support of the Army Navy Literage Procurement Program and a new program for
Foreign Military Sales of equipment to the Taiwan government.  The navy will
not recompete the NAME contract, however, the Company is working with their
customers to move the work onto one of the Company's GSA contracts.

     The Company was awarded a three-year subcontract on August 2, 1999 from
Santa Barbara Applied Research, Inc. to continue its hazardous materials
assessment support to the Naval Air Systems Command.  This program has
accounted for about 2% of the Company's revenue so far in fiscal year 2001.
This support provides environmental engineering and technical services focusing
on the identification and reduction of hazardous material when providing
maintenance to weapons and associated handling and shipping equipment.
Hazardous material reduction support is being expanded to include support for
Foreign Military Sales.

     The Company's Washington, D.C. Operation was awarded a five-year
subcontract on April 24, 1997 from Tracor (now BAE Systems).  This program has
accounted for about 3% of the Company's revenue so far in fiscal year 2001.
This contract provides program management support to the Program Executive
Office, Surface Combatants/AEGIS Program (PEO, SC/AP), PMS400.  The Company
provides contract and other financial reconciliation and closure support for
the Japanese AEGIS Foreign Military Sales cases.  The Company will add some
workload for similar support to the Spanish AEGIS Foreign Military Sales
program in fiscal year 2001.  The Company also provides other financial
management support including case closure processing support to PMS400.

     The Company currently holds an Information Technology General Services
Administration (GSA) contract which was modified to sell our Electronic Records
Management services on a Time and Material and Piece Part count to the
government.  The contract has proved successful as a means to develop new
customers and is registered in the GSA Advantage System.  The Company also
holds a Financial Management Services GSA contract which is presently utilized
in the support of the Seabee Logistics Center.  In January of 2001, the Company
was awarded a new Professional Engineering Services contract with GSA.  This
new GSA contract will be utilized by the Company to develop new work in other
government agencies as well as our current customer base.

                                    -  9 -
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<PAGE>

     The Company is utilizing GSA contract vehicles to provide Oracle
programming services and logistics engineering services at the Naval
Construction Battalion Center in support of the Naval Construction Forces.
The Company has won a five-year contract to support the Bureau of Reclamation
(BOR) and two one year contracts to provide Electronic Records Management (ERM)
services to the BOR, Minerals Management Service.  The Company has signed a new
one year contract to support the NAVFAC Information and Technology Center for
data warehousing and retrieval services.

     The Company started a new operations base located in San Diego (San Diego
Operations) in July 2000 that specializes in C4I work areas.  The military term
"C4I" stands for Command, Control, Communication, Computer and Intelligence.
San Diego Operations is providing top-level C4I system engineering services;
system architecture design; advanced concept development; test and evaluation;
effects-based operation planning, execution and assessment; program management
and business development support; organizational management analysis; and
information technology and information operations (IO) support.  The initial
customer base includes SPAWAR Systems Center San Diego and Program Executive
Office Strike Weapons and Unmanned Aviation.  San Diego Operations personnel
work closely with Office of Naval Research, Defense Advanced Research Programs
Agency, Assistant Secretary of the Navy for Research, Development and
Acquisition, Chief of Naval Operations, Naval Warfare Development Command,
Joint Battle Center, and other services and Joint Agencies.  San Diego
Operations has accounted for about 16% of the Company's revenue so far in
fiscal year 2001.

Results of Operations
---------------------

     The Company revenue for this quarter is more than 42% more than those in
the same quarter in FY 2000.  For the first six months of FY 2001, revenue
increased by about 37% over the prior year's same period.  The primary reasons
for the increase in revenue are the addition of the C4I Division and increased
work on the MPAA and NAME contracts.  Revenue in the second quarter of FY 2001
was almost 10% higher than the first quarter of the year.

     Total contract and general and administrative expenses were 94% and 95% as
a percentage of contract revenue for the six months ended of FY 2001 and
FY 2000.  Interest expense is higher due to the increased use of the Company's
credit facility.  The reason for the increased use of the credit facility is
due to the cash flow demands associated with the growth of the Company.

     The Company income from operations for this quarter is about 135% more
than those in the same quarter in FY 2000.  For the first six months of FY
2001, income from operations increased by about 82% over the prior year's same
period.  Net income for the quarter is $94,000 as compared to $48,000 for this
quarter in the prior year, a 96% increase.  For the first six months of FY
2001, net income increased by about 42% over the prior year's same period.
While the Company's net income increased dramatically in the second quarter of
FY 2001, there can be no assurance that the Company will continue to record
increased profits or otherwise sustain this level of net income in the future.
The negotiated contract backlog was approximately $4,606,000 at the end of the
second quarter, a 29% increase over the first quarter's backlog.

                                    - 10 -
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<PAGE>

Liquidity and Capital Resources
-------------------------------

     The Company had contract receivables (net) of $2,211,000 at the end of the
second quarter of FY 2001.  For the same quarter in FY 2000, the contract
receivables (net) were $1,292,000.  The reason for the increase in contract
receivables is due to the Company's increased revenue and slower payments from
some of the Company's prime contractors.

     The Company had accounts payable of $116,000 at the end of the second
quarter of FY 2001.  For the same quarter in FY 2000 the accounts payable were
$151,000.  The payment status of these accounts payable is current.

     The outstanding balance on the Company's revolving line of credit with
Scripps Bank was $676,000 at the end of the second quarter of FY 2001.
At the end of the same period in FY 2000, the line of credit balance was at
zero.  The reason for the increased usage of the credit facility was due to the
Company's increased revenue and slower payments from some of the Company's
prime contractors.

     Subsequent to December 30, the Company was successful in collecting
substantially all of the past due receivables.  When these past due receivables
were combined with the Company's normal collections, the line of credit was
paid down to zero.  The Company continues to use the line of credit for cash
flow purposes.

     The Company's primary source of liquidity is its $850,000 revolving credit
facility under a loan agreement with Scripps Bank that is due to mature on
October 15, 2001.  The loan is collateralized by all of the Company's assets
including contract receivables.  Scripps advances funds requested by the
Company of up to 80% of the Company's billed contract receivables which are
less than 90 days old.  Scripps charges an interest rate of 1.5% over prime.
The Company is within all financial covenants of the loan agreement.

     Management believes that the Company will have sufficient cash flow from
operations and funds available under the revolving credit agreement with
Scripps Bank to finance its operating and capital requirements through at least
the current fiscal year.  Long term liquidity depends on the Company's ability
to maintain and grow its current business base.
<TABLE>
     Several key factors indicating the Company's financial condition include:
<CAPTION>
                                        December 30, 2000     June 30, 2000
                                           ----------           ----------
<S>                                        <C>                  <C>
     Current ratio                              1.96                 2.87
     Maximum debt to net worth                  0.89                 0.60
     Net worth                             $1,477,000           $1,296,000
     Net working capital                   $1,167,000           $1,189,000
     Debt to total assets                         47%                  38%
     Book value per common share           $    0.43            $    0.37
</TABLE>
     These Company trends may be positive, however, there can be no certainty
that if they are positive, that they will continue to be positive. The current
ratio is derived by dividing total current assets by total current liabilities.
Maximum debt to net worth is calculated by dividing total liabilities (total
current liabilities plus other liabilities) by net worth.  Net worth is total
stockholders' equity.  Net working capital is total current assets less total
current liabilities.  Debt to total assets is total liabilities divided by
total assets.  Book value per common share is stockholders' equity related to
common shares divided by the weighted average number of common shares
outstanding.

                                    - 11 -
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<PAGE>

Item 2a.  Factors Which May Affect Future Results
          ---------------------------------------

     Information contained in this Form 10-QSB should be studied carefully by
any potential investor while considering the following risk factors to the
Company.

     1.   LACK OF BUSINESS DIVERSIFICATION.  Essentially all the Company's
business at the present time is with the U.S. Navy.  Even though the level of
business with its customers is growing and the Company has negotiated
multiple-year contracts, there is no certainty that budget changes in Congress
or the Defense Department will not seriously affect the Company.

     2.   DEPENDENCE ON KEY PERSONNEL.  The Company has a few key management,
project and technical personnel that are intimately involved in their functions
and have day to day relationships with critical customers.  The Company is not
able to afford extra standby staff. As a result, at its current size, it would
be affected in an uncertain way if any of these personnel were to be lost to
the Company.

     3.   COMPETITION.  The Company has many competitors who vie for the same
customers as the Company.  They are competent, experienced and continuously
working to take work projects away from the Company.

     4.   LIMITED ASSETS OF THE COMPANY.  The Company has very limited assets
upon which to rely on for adjusting to business variations and for growing new
businesses.  While the Company is likely to look for new funding to assist in
the acquisition of other profitable businesses, it is uncertain whether such
funds will be available.  While the Company's management believes that its
financial policies have been prudent, the Company's substantial reliance on a
short term bank loan with Scripps Bank and other short-term accruals impose
certain limitations on the Company.  If the Company is to grow and expand its
operations, the Company will need to raise significant amounts of additional
capital.  There can be no assurance that the Company will be successful in
raising a sufficient amount of additional capital, or if it is successful, that
the Company will be able to raise capital on reasonable terms in light of the
Company's current circumstances.  In the event that the Company raises
additional capital, the Company's existing stockholders may incur substantial
and immediate dilution.

     5.   LIMITED MARKET FOR COMMON STOCK.  The Company's stock is traded (OTC)
on the Electronic Bulletin Board.  Trading for the stock is sporadic and at
present there is a limited market for the Company's Common Stock.  There can be
no assurance that a market will in fact develop.  Even if a market does
develop, it may not be sustained.

     6.   POSSIBLE RULE 144 STOCK SALES.  A total of 1,359,362 shares of the
Company's outstanding Common Stock are "restricted securities" and may be sold
only in compliance with Rule 144 adopted under the Securities Act of 1933 or
other applicable exemptions from registration.  Rule 144 provides that a person
holding restricted securities for a period of one year may thereafter sell, in
brokerage transactions, an amount not exceeding in any three-month period the
greater of either (i) 1% of the Company's outstanding Common Stock, or (ii) the
average weekly trading volume during a period of four calendar weeks
immediately preceding any sale.  Persons who are not affiliated with the
Company and who have held their restricted securities for at least two years
are not subject to the volume limitation.  Possible or actual sales of the
Company's Common Stock by present shareholders under Rule 144 may have a
depressive effect on the price of the Company's Common Stock in any market
which may develop.

                                    - 12 -
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<PAGE>

     7.   RISKS OF LOW PRICED STOCKS.  Trading in the Company's stock is
limited.  Consequently, a shareholder may find it more difficult to dispose of,
or to obtain, accurate quotations as to the price of, the Company's securities.
In the absence of a security being quoted on NASDAQ, trading in the Common
Stock is covered by Rule 3a51-1 promulgated under the Securities Exchange Act
of 1934 for non-NASDAQ and non-exchange listed securities.
     Under such rules, broker/dealers who recommend such securities to persons
other than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or an annual income exceeding $200,000 or $300,000
jointly with their spouse) must make a special written suitability
determination for the purchaser and receive the purchaser's written agreement
to a transaction prior to sale.  Securities are also exempt from this rule if
the market price is at least $5.00 per share, or, for warrants, if the warrants
have an exercise price of at least $5.00 per share.  The Securities Enforcement
and Penny Stock Reform Act of 1990 requires additional disclosure related to
the market for penny stocks and for trades in any penny stock defined as a
penny stock.
     The Commission has recently adopted regulations under such Act which
define a penny stock to be any NASDAQ or non-NASDAQ equity security that has a
market price or exercise price of less than $5.00 per share and allow for the
enforcement against violators of the proposed rules.
     In addition, unless exempt, the rules require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule prepared by the
Commission explaining important concepts involving a penny stock market, the
nature of such market, terms used in such market, the broker/dealer's duties to
the customer, a toll-free telephone number for inquiries about the
broker/dealer's disciplinary history, and the customer's rights and remedies in
case of fraud or abuse in the sale.
     Disclosure also must be made about commissions payable to both the
broker/dealer and the registered representative, current quotations for the
securities and, if the broker/dealer is the sole market maker, the
broker/dealer must disclose this fact and its control over the market.
     Monthly statements must be sent disclosing recent price information for
the penny stock held in the account and information on the limited market in
penny stocks.  While many NASDAQ stocks are covered by the proposed definition
of penny stock, transactions in NASDAQ stocks are exempt from all but the sole
market-maker provision for (i) issuers with $2,000,000 in tangible assets
($5,000,000 if the issuer has not been in continuous operation for three
years), (ii) transactions in which the customer is an institutional accredited
investor and (iii) transactions that are not recommended by the broker/dealer.
In addition, transactions in a NASDAQ security directly with the NASDAQ market
maker for such securities, are subject only to the sole market-maker
disclosure, and the disclosure with regard to commissions to be paid to the
broker/dealer and the registered representatives.
     Finally, all NASDAQ securities are exempt if NASDAQ raised its
requirements for continued listing so that any issuer with less than $2,000,000
in net tangible assets or stockholders' equity would be subject to delisting.
These criteria are more stringent than the proposed increase in NASDAQ'S
maintenance requirements.  The Company's securities are subject to the above
rules on penny stocks and the market liquidity for the Company's securities
could be severely affected by limiting the ability of broker/dealers to sell
the Company's securities.

                                    - 13 -
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<PAGE>

     8.   CONTROL BY OFFICERS AND DIRECTORS.  As of December 30, 2000, Officers
and Directors of the Company own 36.8% or 1,162,748 shares of the Company's
common stock (before including any shares acquired upon exercise of any stock
options) and thereby control the Company's affairs.  Not included in the above
numbers are the 460,522 shares held or controlled by Dr. Lawrence L. Kavanau,
the Company's Chairman Emeritus.

     9.   RECEIVABLE FROM FORMER AFFILIATE.  Big Canyon Investments, Inc.
(BCI), a wholly owned subsidiary of UniPrise Systems, Inc. (UniPrise), a
company partially owned by Robert D. Mowry, a former Director of the Company
and the Company's former Chairman and Chief Executive Officer (the "Former
Affiliate"), entered into an agreement with the Company in which the Company
was providing collection services to BCI/UniPrise for certain receivables (the
"Receivables").  As of December 30, 2000, the Former Affiliate owed the Company
approximately $34,000 for these services.  The Former Affiliate's debt has been
converted to a note and the Company is no longer providing services to the
Former Affiliate.  The total of the Receivables is greater than the debt owed
to the Company.

     10.  EFFECT OF INCREASED AUTHORIZATION OF COMMON SHARES.  The Company's
Common Shareholders approved an amendment to the Company's Articles of
Incorporation which increases the number of authorized common shares from 12
million to 48 million common shares.  While the Company has no current specific
plans for the issuance of the additional shares that have been authorized, the
amendment gives the Company's Board of Directors the right to issue nearly 45
million additional shares (in excess of the 3,162,732 shares issued as of
January 31, 2001) without further stockholder approval.  As a result, the
Company may, upon action solely by its Board of Directors, issue additional
shares of the Company's Common Stock up to a maximum of nearly 45 million
additional shares.

                                    - 14 -
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<PAGE>
                         PART II - OTHER INFORMATION


Item 1.   Legal Proceedings
---------------------------

     As previously disclosed, on March 28, 2000, the Company was served notice
that it was named as a defendant in a lawsuit alleging breach of factoring
contracts.  On December 8, 2000, the United States District Court, Central
District of California, dismissed the complaint against all defendants,
including the Company.  The plaintiffs have appealed the case.

Item 2.   Changes in Securities
-------------------------------

     None

Item 3.   Defaults Upon Senior Securities
-----------------------------------------

     None

Item 4.   Submission of Matters to a Vote of Securities Holders
---------------------------------------------------------------

     On January 17, 2001, the Company held its 2000 Annual Meeting of
Shareholders.  There were 3,162,732 shares eligible as of the record date and
2,513,326 shares were represented either in person or by proxy at the meeting.
The following matters were voted on at the meeting:

     (a.)  Proposal to elect the Directors pursuant to management's
nominations.  This proposal was approved with 2,485,288 shares voting in favor,
28,038 shares voting against, and 0 shares abstaining.

     (b.)  Proposal to approve the appointment of J. H. Cohn LLP as the
independent public accountants for the corporation for its 2001 fiscal year.
This proposal was approved with 2,506,701 shares voting in favor, 200 shares
voting against, and 6,425 shares abstaining.

     (c.)  Proposal to increase the number of authorized common shares from
12.0 million to 48.0 million.  This proposal was approved with 2,381,949 shares
voting in favor, 123,314 shares voting against, and 8,063 shares abstaining.

     (d.)  Proposal to increase the amount of common shares subject to the
SYS 1997 Incentive Stock Option and Restricted Stock Plan for employees from
750,000 to a total of 1,750,000.  This proposal was approved with 2,445,637
shares voting in favor, 62,687 shares voting against, and 5,002 shares
abstaining.

Item 5.   Other Information
---------------------------

     Effective July 1, 2000, the Board of Directors approved a new compensation
plan for the outside directors of the Company.  Under the new compensation
plan, each outside director will receive $1,000 per Board of Director meeting,
in cash or common stock at the discretion of the Company.  In addition, each
outside director will receive stock options for 1,000 shares of common stock
for each Board of Directors meeting attended by the director.  For the
Company's first and second quarters, the stock option price was set at $0.88
per share.  The stock option price of $0.88 per share was greater than the
market value of the shares on the date of grant.  The stock option price will
be reviewed quarterly.

                                    - 15 -
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<PAGE>

Item 6.   Exhibits and Reports on Form 8-K
------------------------------------------

     (a.)  On July 28, 2000, the Company filed a Form 8-K announcing that their
           Letter of Intent to acquire Systems Integration & Research, Inc. had
           expired.

     (b.)  On December 22, 2000, the Company filed a Form 8-K announcing that
it
           had signed a Letter of Intent to acquire Paragon Systems, Inc.

                                    - 16 -
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<PAGE>

                                  SIGNATURES


     In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.




                                                          SYS
                                       ----------------------------------------
                                                     (Registrant)



Date:      February 9, 2001            /s/ W. Gerald Newmin
           ----------------            ----------------------------------------
                                       W. Gerald Newmin
                                       Chief Executive Officer